Unlocking Property Investment with Self Managed Super Funds

In a recent segment on Hot 91’s Hot Property, Paul Westcott from BrokerCo and Mal Cayley from Investor Property joined Jade Harrison to explore the process of buying property through a Self Managed Super Fund (SMSF). This powerful investment strategy can be a game-changer for those looking to leverage their superannuation to enter the property market. Listen or read on to find out more. Here’s how it works and how BrokerCo can assist you every step of the way.

How to Buy Property with a Self Managed Super Fund

Charging Your Super Fund

One of the first steps in purchasing property through an SMSF is ensuring your super fund is adequately charged with sufficient funds. Paul explains that while the process isn’t overly complicated, it does require some preparation. You’ll need at least 20% of the property’s purchase price, plus a buffer for additional costs. Typically, having over $120,000 in your super is necessary, but combining funds with family members can provide a stronger financial base—up to $200,000 combined makes this a very solid option. You will also need to set up a Bare Trust as the purchasing entity. This can be set up by your accountant.

Pooling Funds with Family

Mal Cayley from Investor Property explains he has seen families of up to four people pooling their super funds together, significantly enhancing their borrowing capacity. This collective approach can unlock greater investment opportunities and make property purchase through an SMSF more attainable.

Consulting with Professionals

Setting up and managing an SMSF requires careful planning and compliance with regulations. It’s essential to speak with your accountant and a financial planner to structure your SMSF correctly and ensure all legal requirements are met. Their expertise will help you navigate the complexities and optimise your investment strategy.

Understanding the Borrowing Process

Assessing Borrowing Capacity

Once your SMSF is set up through an accountant, borrowing through it involves specific considerations. Banks will assess your borrowing capacity based on the rental yield of the property you plan to purchase. This means the property’s rental income will largely determine how much you can borrow. Any shortfall between the loan amount and the property cost will need to be covered by your personal income feeding additional contributions to the SMSF Fund.

Legal Complexities

While the borrowing process itself isn’t overly complicated, it does involve legal intricacies. These include compliance with superannuation laws, ensuring the property meets investment criteria, and structuring the loan correctly. This is where professional guidance becomes invaluable.

Benefits of Investing with an SMSF

Investing in property through an SMSF offers several benefits:

● Control and Flexibility: You have greater control over your investment choices and can tailor your strategy to meet your financial goals.

● Potential for Growth: Property investment can offer significant long-term growth and rental income, enhancing your retirement savings.

● Tax Advantages: SMSFs can offer tax benefits, including lower capital gains tax and potential tax deductions.

How BrokerCo Can Help

Navigating the process of buying property through an SMSF can be complex, but BrokerCo is here to help. Our team of experts can guide you through setting up your SMSF, understanding your borrowing capacity, and finding the right property investment. We work closely with accountants, financial planners and investment experts to ensure every aspect of your investment is optimised and compliant with regulations.

Ready to Get Started?

If you’re considering leveraging your superannuation to invest in property, now is the perfect time to explore your options with an SMSF. Investing in property through an SMSF can be a powerful way to grow your retirement savings and achieve your financial goals.

Contact BrokerCo today for personalised advice and support. Call us at (07) 5370 8333 or fill out the contact form and we’ll contact you!

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